The Airbnb effect in Amsterdam

This is Gedempte Begijnensloot, a street in the center of Amsterdam. It consist of a collection of houses built around 1300, once administered by a Catholic brotherhood. It is a strategic spot for anyone in the city - close to the canals, to the mains shops, to the national and international restaurants, and to the main attractions of the city. It is a perfect place for a tourist.

But this is not only why Gedempte Begijnensloot is the main character of this story. See this attic?

This attic is advertised as a "luxury apartment in a quiet location in the center of Amsterdam". It is available, and had a "beautifully renovated one bedroom on the second and top floor with balcony and storage room" inside its 60 m². If that sounds interesting, it could be yours if you can afford €1,595 per month (excluding service costs).

This attic, as many other properties in the region, was impacted by the arrival of something new. And I'm not talking about the aggressive real estate speculation that changed the Dutch market in the 20th century. And I'm not talking about the aggressive real estate speculation that changed the Dutch market in the 20th century. In addition to this scenario, the short-term rental platform Airbnb started to provide apartments in that same location at much lower prices. When looking for apartments in the platform, the first one that appeared for a random set of dates I selected was this one. It has almost all attic facilities, located just a few houses away.

And it costs €38 per night, roughly €1,140 per month and without the burden of municipal fees and other charges.

This is one example of the so-called 'Airbnb effect'. The issues triggered by the global rise of Airbnb are a subject of ongoing debate in Amsterdam. It has become extremely popular, and lucrative, to rent out a flat or room here on one of the short-stay rental platforms, of which Airbnb is by far the biggest. Since the launch of Airbnb in the capital of the Netherlands, Amsterdam, there has been an increasing amount of media coverage about the side effects of this service. Papers, government officials and the municipality of Amsterdam have reported about issues such as nuisance caused by Airbnb guests, reduced housing stock for inhabitants of Amsterdam and increased house prices. This led to an investigation of the municipality of Amsterdam into the short term rental (STR) sector. In their report (municipality of Amsterdam, 2013) it is stated that illegal hotels are properties without a hotel licence where tourists pay a fee to rent a room. With this statement they effectively labelled almost all Airbnb listings as illegal hotels. Over the next three years the municipality of Amsterdam has developed rules about the maximum number of guests per property, maximum number of days rented out per year, the levy of tourist tax and safety. Even though the municipality of Amsterdam reported in May 2016 that 80% of the hosts abide by the rules4, there is still a lot of controversy about the nuisance caused by guests and the increasing house prices.

In 2016, the Dutch bank ING stated in a report that Airbnb drives up real estate prices, because people are prepared to pay more for a flat when they can make extra money by renting it out. The bank found the effect to be “considerable”, although not everybody agrees on this conclusion.

At the end of the same year, Vincent van der Bijl, a Masters student in the Economics department of the University of Amsterdam also decided to investigate the matter. He concluded, after analyzing reports on prices in some central neighborhoods in Amsterdam, that the Airbnb has a positive impact on the house prices in Amsterdam. On average, house prices in Amsterdam increase by 0.42% per increase in Airbnb density by 10,000 reviews posted within a 1,000 meter radius around the property in the period 12 months before the transaction date.

This led to Amsterdam city council ban Airbnb rentals in some parts of the old city and part of the canal area from July 1st 2020. The ban covers the 1012 and 1017 postcode areas and is being introduced after "research showed the number of tourist rentals is having a major impact on locals", as the municipality reports. But how did that happend? Let's go back a few years ago.

What a few years of Airbnb looks like?

This is the price range in the city of Amsterdam in 2017.

And this is how it changed in the following year. See how the red areas increase around the canals? Their prices went up almost 35% in one year.

Finally, this is how the market was in 2019, year of last update of municipality data. Here the prices of the same central region also varied and expanded, becoming overall more expensive.

Here you can see the evolution of the prices and where the Airbnbs in the city are located.

Out of a total of 18.782 Airbnbs, 78% are entire houses or apartments. 20% are private rooms and the final 2% are hotel rooms (162 listings) or shared rooms (62 listings). Their price range varies between €5 and €8,000. In this graph, you can see these outliers and where they are located:

It is also interesting to notice that the one of the most requested dates (in non-pandemic years) in Amsterdam are always around April. This is probably due to Koningsdag or King's Day. It is a national holiday, celebrated on 27 April - the birth of King Willem-Alexander.

But, one of the key reasons to justify the ban is the allegedly reports of nuisance. The City of Amsterdam provides public access to some data on nusance reports over the years, but they are not geographically located. The security department of the city was contacted for this story, but didn't provide the adequate datasets on time for publication.

On the other hand, according to the authorities, the reports on nuisance due to "other things" are mostly related to neighboors fights or disagreements. The security department also informed that there isn't a specific report on nuisance related to an Airbnb rental, although they acknowledge that it is not a mandatory specification in the police file.

Van der Bijl on his Masters' thesis found that the impact of Airbnb on the house prices depends on the nuisance level in the district. The lower the nuisance level, the bigger the impact of Airbnb is on the house prices. Assuming that a high Airbnb density indicates that the area is attractive for tourists, there are two implications. His findings suggest that the first is that people are willing to pay more for houses in districts with a low nuisance level and high potential income that can be generated using Airbnb. The second is that Airbnb influences the house prices - but the price increasing potential income channel outweighs the price reducing nuisance channel.

Is there a solution?

Amsterdam has taken some steps to address the impact of Airbnb on its housing markets. Back in 2014, it was the first city to sign an agreement with the multinational, which saw Airbnb agree to levy and hand over tourist taxes to the city, remove addresses where the council has intervened because of complaints, and inform users of its rules (typically, that apartments should be rented out for no longer than 60 days per year, to not more than four guests at a time). But the platform's lack of transparency and collaboration made it difficult for the agreement to work in practice, leading to the 2020 ban.

City’s innovators are trying to search for the right balance between visitors-residents life in a city experiecnce and even when the issue of liveability vs. mass-tourism does not have a clear answer yet, the Dutch alternatives present possibilities for setting new priorities for Airbnb. That’s why while steps are being taken to address the ‘Airbnb effect’ on the housing market, a new initiative has been taking shape: FairBnB – the alternative to work on the local, fair, non-extractive and collaborative economy.

While the "Airbnb effect" seems to still be a question in dispute inside the city council, the problem of real state speculation and gentrification is intrinsic to some parts of Amsterdam. Unregulated platforms like Airbnb seem to be a focus point at the moment, but not the only agitators. Afterall, they are only attractive because people seek nice places with low prices. As described in the Airbnb add of the "Cognac Suite", a few houses before the Gedempte Begijnensloot attic: "The house is rightfully part of the historic city centre in Amsterdam, being more than 100 years old, built in iconic Amsterdam style. On the inside, the house has been completely stripped and renovated in 2018." All for last than €38 a day.

Final Project for the Data Journalism course / Erasmus Mundus Journalism / 2020